CMAT Business Mathematics 2 — Questions and Answers
Question 1: A company earns $500,000 revenue and has COGS of $300,000. What is the gross profit margin?
- 30%
- 40% (Correct answer)
- 50%
- 60%
Correct answer: 40%
Gross Profit = 500,000 − 300,000 = 200,000; Margin = 200,000 / 500,000 × 100 = 40%.
Question 2: What is the P/E ratio if a stock's price is $60 and earnings per share is $4?
- 12
- 15 (Correct answer)
- 18
- 20
Correct answer: 15
P/E Ratio = Price per Share / EPS = 60 / 4 = 15.
Question 3: Debt-to-equity ratio = 0.5. If total equity is $200,000, what is total debt?
- $50,000
- $100,000 (Correct answer)
- $150,000
- $200,000
Correct answer: $100,000
Debt = D/E Ratio × Equity = 0.5 × 200,000 = $100,000.
Question 4: Annual revenue is $1.2M and average accounts receivable is $100,000. What is the receivables turnover ratio?
- 8
- 10
- 12 (Correct answer)
- 14
Correct answer: 12
Receivables Turnover = Revenue / Avg. Receivables = 1,200,000 / 100,000 = 12.
Question 5: A bond has a face value of $1,000, coupon rate of 8%, and matures in 5 years. What is the total interest paid?
- $320
- $400 (Correct answer)
- $450
- $500
Correct answer: $400
Annual coupon = 8% × 1,000 = $80; total interest = $80 × 5 = $400.
Question 6: A project costs $10,000 and generates $3,000 per year for 5 years. What is the simple payback period?
- 2.5 years
- 3 years
- 3.33 years (Correct answer)
- 4 years
Correct answer: 3.33 years
Payback Period = Initial Investment / Annual Cash Flow = 10,000 / 3,000 ≈ 3.33 years.
CMAT Business Mathematics 2
A company earns $500,000 revenue and has COGS of $300,000.
What is the gross profit margin?